Discussion: Does keeping older workers in the workforce help the employment of younger workers?
Our article from René Böheim on the effects of early retirement schemes on youth employment has sparked debate on LinkedIn, with human capital and country-wide demographics featuring most prominently in the discussion.
In attempts to ensure the fiscal sustainability of state pensions, policymakers of many countries have decided to raise retirement ages. However, youth unemployment continues to be a major concern across most advanced and developing nations, and fears have been raised that keeping older people in the workforce for longer might be hindering youth employment further.
By contrast, Böheim suggests that younger and older workers are complements for each other rather than substitutes. Countering widespread fears, he presents evidence which suggests that higher employment rates for older workers coincides with higher employment rates for younger workers – and that increasing the retirement age actually increases younger workers’ wages.
Dezzie Prewitt of Brandman University concurs with this theory, positing that older workers can aid the training and learning of recent college graduates, which lowers frictional employment and increases labor productivity.
However, there may be wider issues to consider in order to determine where the correlation lies. Robert Ewalt of the Institute of Management Accountants suggests that a higher number of older workers may simply reflect healthy economic growth and increased employment more generally, which would improve employment prospects for younger workers by extension.
CEO and Founder of Europacifica Consulting Naomi Fink wonders whether more research into the Japanese economy might offer stronger conclusions. She suggests that Japan’s aging population might test Böheim’s hypothesis, and cites a paper from the National Bureau of Economic Research (NBER) which discusses ways in which the country’s older workforce has affected youth employment.
What do you think? Let us know on LinkedIn.